A comparison of the 2005-2009 cabinet Merkel I (the “Grand“ Coalition) and the Christian Democrat-Liberal coalition cabinet Merkel II formed in 2009 presents an interesting puzzle. Political commentators and coalition theorists alike would have expected the CDU/CSU-SPD coalition to experience a relatively high, and the CDU/CSU-FDP coalition a relatively low level of overt inter-party conflict. In reality, however, relations in the CDU/CSU-FDP coalition were relatively conflictive, whereas the Grand Coalition seemed to manage conflict between reluctant partners successfully. This article seeks to explain these seemingly paradoxical differences between the two coalitions. It demonstrates that both the positioning of the coalition parties in the policy space and important institutions constraining coalition bargaining after the formation of the cabinet Merkel II (portfolio allocation, role of the CDU/CSU state minister presidents) disadvantaged the FDP in pursuing its key policy goals (especially tax reform). As a result, the Liberals resorted to “noisy“ tactics in the public sphere. The grand coalition, by contrast, was an alliance of co-equals, which facilitated a more consensual management of inter-party conflict.